Star City Pty Ltd (formerly known as Sydney Harbour Casino Pty Ltd) v Tan Hong Woon
[2001] SGHC 100

JUDGMENT:

Cur Adv Vult

21.    How SCs claim against Mr Tan is characterised is thus of utmost importance. The real question in this case may thus be framed as follows: Considering the arrangement between SC and Mr Tan regarding the CCF facility offered to him, and the events which occurred, is SC seeking to recover a loan or money alleged to be won upon a wager? To answer this question, it is necessary to consider whether or not SCs act of exchanging Mr Tans five house cheques of AUD 50,000 each for chip purchase vouchers resulted in the creation of a genuine loan to him.

22.    A very sensible approach on the effect of an exchange of a cheque for chips was adopted in a Scottish case, Cumming v Mackie (1973) SLT 242. Although that case is fraught with difficulty and concerned a number of statutory provisions which are not relevant to the issue in the present case, the following passage from Lord Frasers judgment at p 244 merits attention:

Where a member of an ordinary social club, which is not connected with gambling, carries out a transaction which he would ordinarily describe as "cashing a cheque at his club", I do not think that there is any question of the club making a loan or advance to the member. I should have thought that the member, by handing over his cheque, puts the club in funds to the amount of the cheque, and the club in return undertakes to meet the members gambling losses to the face value of chips. The member pays in advance, and he never has to repay any loan.

(emphasis added)

23.    There is no reason why the position should, in the absence of any statutory provision governing the position, be altered in the case of an exchange of cheques for chips or chip purchase vouchers in a casino.

24.    The English position on whether or not there is an underlying loan when a cheque is exchanged for gambling chips is different. In Crockfords Club Ltd v Mehta [1992] 1 WLR 355, 368, Stuart-Smith LJ summed up the English position when he said that the old cases relating to gaming proceed on the basis that where there is an exchange of cash or tokens for a cheque, there is an underlying loan. This is not to say that English law on the recovery of loans made for the purpose of gambling is uncomplicated. Indeed, in CHT Ltd v Ward [1965] 2 QB 63, 86, Davies LJ conceded, while referring to loans made for gambling in England and abroad, that the position may have to be reviewed when he said as follows:

The question whether these authorities correctly interpret and apply the statutes with regard to either sort of loan may be a matter for consideration elsewhere. Whether in any event it is in the public interest that either sort of loan should be recoverable might be a matter for consideration by Parliament.

25.    For the purpose of determining whether SCs claim should be characterised as a claim for a sum of money won upon a wager or as a loan, the history of the English Gaming Acts and the approach of the English courts to contracts of gaming ought to be examined. The history of the English Gaming Acts was discussed in great detail by Selvam J in Star Cruise Services Ltd v Overseas Union Bank Ltd [1999] 2 SLR 412. What needs to be reiterated here is that not all the English Gaming Acts have corresponding provisions in Singapore. As such, some of the English decisions discussed below concern statutory provisions which are not altogether relevant to the position in Singapore. All the same, they are discussed for the sole purpose of illustrating the unwillingness of English courts to accommodate attempts to evade the provisions of the English Gaming Acts.

26.    English legislation on gaming contracts was intended to check gambling on credit. As a result, judges have more often than not forcefully thwarted manoeuvres to outflank the Gaming Acts by disguising claims for gambling debts as other types of claims.

27.    To begin with, in Hill v William Hill (Park Lane) Ltd [1949] AC 530, the House of Lords made it clear that creditors could not avoid the Gaming Acts by entering into fresh agreements with debtors for the payment of gambling debts. Often enough, such fresh agreements had been entered into after the creditors threatened to report the debtors to their banks or others in authority. Viscount Simon said at p 548 as follows:

One cannot read the Gaming Act 1845 without perceiving that it was a very serious attempt on the part of the legislature to put down wagering, and I decline to think that such an obvious and fatal blot was permitted to exist in it, which would well-nigh neutralize its practical effect, when I find language used which is perfectly apt to meet the case and which to my mind can fairly bear no other interpretation than that which would thus render it effective.

(emphasis added)

28.    Attempts to get around the Gaming Acts by instituting an action for accounts also failed in a number of cases. In Law v Dearnley [1950] 1 KB 400, the Court of Appeal emphasized, when striking out an action for accounts stated in respect of betting transactions, that it is the reality of the transaction which must be looked at and not the way in which it was presented to the court. Singleton LJ said as follows at p 417:

There is no getting away from the fact that the plaintiff sued the defendant in respect of bets on horses and really on nothing else, whatever he may choose to call the action. The fact remains that the courts of this country are not meant for use for the recovery of gambling debts. Everyone has recognised that for a long time. That is why other names or labels are put upon them when they are brought into court.

(emphasis added)

29.    More relevant to the present case are the cases where the English courts rejected claims on gaming contracts which were disguised as claims for the recovery of loans. In Woolf v Freeman [1937] 1 All ER 178, the plaintiff was the proprietor of a club, at which card games were played with chips and counters. The defendant purchased 30 worth of chips from the club and paid for them with a third partys cheque. The cheque was subsequently dishonoured. There was a practice in the club that if a loser had insufficient chips to pay for his losses, both the winner and the loser would proceed to the club office, where the office paid the winner on behalf of the loser. After the office had paid the defendants losses on his behalf, the plaintiff sued the defendant for 30, the price of the counters, or alternatively, for the same sum as money lent. The claim was dismissed by Macnaghten J, who said as follows at p 181:

Here is a man carrying on a club for the purpose of gaming or wagering at cards, and if the proprietor of such a club chooses to sell his chips on credit, or for a security that proves to be of no avail, then it seems to me that he cannot have resort to a court of law to enforce the obligation of that member. Therefore the sum of 30 for chips cannot be recovered by reason of the Gaming Acts.

(emphasis added)

30.    MacNaghten Js judgment was applied by the Court of Appeal in CHT Ltd v Ward [1965] 2 QB 63, where another attempt to recover what the plaintiff contended was a loan was dismissed. In this case, the plaintiffs were the proprietors of a club and the defendant was a member of that club. Poker, as played in the club was lawful gaming within section 16 of the English Betting and Gaming Act 1960. It was played by means of chips, which were obtained from the plaintiffs, who debited the members accounts with the total value of chips obtained by them. Weekly statements of account were sent out to members. By 22 June 1961, the defendants account showed that her gaming losses amounted to 196 14s 2d. The plaintiffs sued the defendant to recover that sum as money loaned to her for the purpose of enabling her to engage in gaming at the club. Their claim was dismissed by Lawton J, whose decision was affirmed by the Court of Appeal. Davies LJ, who delivered the judgment of the Court, said that in all essentials, Woolf v Freeman was indistinguishable from the case before the court. Noting that the main contention of the plaintiffs, put in various ways, was that the issue of the chips to the defendant was equivalent to a loan of money, he said at p 79 as follows:

It is impossible to accept this analysis of the situation. People do not game in order to win chips; they game in order to win money. The chips are not money or moneys worth; they are mere counters or symbols used for the convenience of all concerned in the gaming.

31.    In MacDonald v Green [1951] 1 KB 594, the English Court of Appeal also had occasion to express its disapproval of an attempt to disguise a gambling transaction as a loan made to a gambler after he had already incurred losses at the gambling table. Although that case concerned an alleged loan given after the gambling losses had already piled up, it is still worth noting. In that case, the plaintiff was the managing director of a company which carried on business as bookmakers and commission agents. In June 1949, the defendant owed the company 4,020 for losses on betting transactions. The plaintiff agreed to lend the defendant money to pay his debt. A company servant delivered a cheque for 4,020 to the defendant, together with a note, which the defendant signed. The note acknowledged the receipt of the cheque and stated that the defendant would repay the loan by weekly instalments of 80. The defendant endorsed the cheque and handed both documents to the companys servant. The defendant defaulted when the balance of the loan was 1,860 and the plaintiff sued to recover this sum. The defendant contended that the contract concerned the payment of money by the plaintiff to the creditor company in respect of betting losses and not a loan. The plaintiffs claim was upheld by Slade J. However, the Court of Appeal took a different view. Denning LJ, as he then was, stressed that the courts must look at the substance where a transaction is disguised as a loan. He explained that bookmakers would be presented with a means of evading the Gaming Acts if Slade Js decision was upheld and added as follows at p 605:

The transaction seems to me to fall precisely within the words of s 1 of the Gaming Act, 1892. The money for which MacDonald sues is money which his bank paid to the bookmaking company in respect of the betting debts which Green had incurred. I do not think it matters whether in point of law, MacDonalds claim against Green was for money lent or for money paid at Greens request. Even if it were disguised in the form of a loan, the substance of it was that MacDonald paid Greens losses and seeks to recover the amount from Green. That he cannot do.

(emphasis added)

32.    The decision of the House of Lords in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 also sheds some light on how SCs claim should be viewed. In that case, one Cass, a partner in the plaintiff firm of solicitors and a compulsive gambler, took money from the firms client account and exchanged it for chips, which were used by him to gamble at the defendant club. One of the issues which arose was whether or not there was a separate contract for the purchase of the chips. Lord Templeman, with whom Lord Ackner, Lord Bridge and Lord Griffiths agreed, said at p 562 as follows:

Another way of analysing the position is this. When Cass entered the club as a member, the club made to him a revocable offer to gamble with him in the manner and upon the terms dictated by the club. Those terms required Cass to pay his gambling stakes in advance and to allow the club to pay their gambling losses in arrears. The revocable offer by the club was accepted by Cass when he staked a chip and became irrevocable when the croupier accepted the chip as a stake. There was only one contract and that was a gaming contract.

(emphasis added)

33.    Lord Templemans view that there was only one contract, namely a gaming contract, merits attention. I do not see why the payment of Mr Tans gambling stakes in advance by a cheque alters the fact that there was only one contract and that was a gaming contract. That the transactions involving the handing over by Mr Tan of the house cheques in exchange for chip purchase vouchers are an integral part of the entire gaming transaction cannot be conveniently ignored. As such, although the Lipkin Gorman case involved a different issue, namely the right of a person whose funds have been stolen and used for gambling purposes at a club or casino to recover the amount lost by the gambler, the passage from Lord Templemans judgment cited above may nonetheless be conveniently modified for the purpose of the present case to read as follows:

By allowing Mr Tan to open a CCF at the casino, the casino made to him a revocable offer to gamble with him in the manner and upon the terms dictated by the club. Those terms permitted Mr Tan to pay his gambling stakes in advance by cheque and to allow the club to pay their gambling losses in arrears. The revocable offer by the club was accepted by Mr Tan when he staked a chip and became irrevocable when the croupier accepted the chip as a stake. There was only one contract and that was a gaming contract.

(emphasis added)

34.    The approach of the courts towards gaming should not differ merely because a cheque was exchanged for chips or chip purchase vouchers. In the light of the discussion above, I do not accept that a claim cannot be viewed as an attempt to recover money won upon a wager merely because a cheque was exchanged for gambling chips, which, in the main, could only be used for gambling in a casino. To hold otherwise would be to mock the attempt by the legislature to curb gambling on credit. If a teacher, who took 100 students to an amusement park where tokens are required for rides and other forms of entertainment, gave the amusement park a cheque of $1,000 for the tokens, no one expects the amusement park to sue for the recovery of a "loan" if the cheque is dishonoured. Why should there be a difference merely because tokens or chips are supplied by a casino in return for a cheque?

35.    Whether there is a genuine loan must depend on the circumstances in each case. If the facts in this case are examined closely, it is evident that Mr Tan gambled and lost the sum which SC is seeking to recover from him. I thus hold that whether SCs claim is framed as a recovery of a loan, a claim on dishonoured cheques or one for money had and received, the action may be characterised as one for money won upon a wager even though Mr Tan issued five house cheques for the chip exchange vouchers.

36.    In the final analysis, the issue in this case is whether or not the courts in Singapore should be concerned with what is, in truth, a claim by SC for money won upon a wager. Section 9A of the Interpretation Act (Chapter 1) provides that in the interpretation of a written law, a purposive interpretation that would promote the purpose or object underlying the written law shall be preferred to an interpretation that would not promote that purpose or object. There can be no doubt that a purposive interpretation should be given to section 5(2) of the Civil Law Act to relieve our courts from having to deal with such a claim. In the face of a claim which is essentially one for money won at a gambling table, one ought to be mindful of Rabels remark that "games of chance, indeed, are not worthy of serious judicial consideration". (See Conflict of Laws: A Comparative Study, 2nd ed, 1958, 572.) It should also be borne in mind that almost two centuries ago, in Gilbert v Sykes (1812) 16 East 150, 162, Bayley J referred to the feeling of judges that "it would be a good rule to postpone the trial of every action upon idle wagers till the Court had nothing else to do." More recently, in his article on Loans for Extraterritorial Gambling and the Proper Law [1998] SJLS 421, 428-429, Associate Professor Yeo Tiong Min rightly observed that "in the modern context, the legal policy behind [section 5] of the Civil Law Act is arguably not only the discouragement of behaviour which is, though not considered fundamentally immoral, at least undesirable, but also the prevention of such disputes from occupying the time and resources of the court, which are better spent on other more deserving matters".

37.    For the reasons already stated, SCs claim is dismissed with costs.

Tan Lee Meng

Judge